The Election Gambit: Economic Risk and Policy Uncertainty
The political and economic risks have converged, and the vote chaos will make it worse.
Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed voter suppression…
If you believe political risk=policy risk=economic risk, then the chaotic Washington headlines cut across some critical variables for the market. That includes the full gamut from tariffs to Iran to whether Congress has a role to play in checking “governing by executive order.” Not tackling the topics is more about relationship caution and controversy avoidance, a habit that is too common in institutional finance.
The 2026 midterm elections will be the next ground zero for policy stress in the face of the worst political divisions since 1860. Regionalism, race, religious aggression (“White Christian Nationalism”), and the basic application of existing law all roll up into a case study of “division by design” driven by those in power.
On the political risk front, Trump’s fixation on the SAVE Act has now flowed into a legislative logjam, with the housing bill held hostage by his fanatical desire to undermine voter turnout in urban areas of swing states. He seeks to undermine and limit mail-in voting, unless he can ban it outright.
We have covered the executive orders to weaponize the US Postal Service in an earlier commentary, and that order was somewhat of a “SAVE lite” variation (see The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26).
We have discussed the scale of mail-in voting broadly to hammer home how shatteringly disruptive such a ban would be for everyone. That is, after all, the goal. The hostage in the process is the voter rolls in a fight over who gets to control them. At its core, that is a question of whether the “Elections Clause of the Constitution” applies. The 2026 plan is the warmup for 2028.
The constitutional problem is not subtle…
That Elections Clause could not be more literal and clearly stated (see Elections Clause (Article I, Section 4, Clause 1) below):
The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.
The Congress shall assemble at least once in every Year, and such Meeting shall be on the first Monday in December, unless they shall by Law appoint a different Day.
Easy translation for anyone not deluded by megalomania is “no King can set the rules on elections.” The states decide. Only the people’s broad base of representatives in the House and Senate can change that.
It does not take much reading on the founding fathers to know that their concern around accidentally setting up a new king was paramount. The states would run the elections, not a king or a wannabe dictator.
That Elections Clause was in part to defend against abuses of executive control, like we have today with Trump regularly reaching for even more. It was also to make sure small states were protected from big states using their influence with the executive branch. We have the opposite today in the electoral college realities. Such are the rules, but those are the rules.
The issues get crazy from there, as we see from a recent NY Times story from the past week:
“Postmaster General David Steiner said at a Senate hearing on Wednesday that under a new proposed rule, the Postal Service would not deliver mail-in ballots in states that decline to hand over sensitive data about voters to the federal government.”
“…in his testimony before the Senate Homeland Security Committee on Wednesday, Mr. Steiner said that the proposed rule would in effect halt the delivery of mail-in ballots in states that do not comply with Mr. Trump’s demands.”
Who sets the rules again?
Evidence is not there, but it seldom matters in the power grab…
The voter fraud claims on “illegals” is a fraud by itself, as numerous states and independent reviews have shown. So it is a solution to a problem that does not exist, with the real motive in the “solution” being a desire to sow chaos and cause stress and a failure of the process. That would in turn allow the voting fraud complaints to clear the obstacles to Team Trump declaring an emergency and cancelling election results.
As a reminder of the objective studies done on non-citizens voting, the results are broad-based in concluding that such fraud is negligible. That includes some conservative and Libertarian think tanks.
For a few easy links:
Trump’s Claims About Noncitizens Voting Are False. We Can Prove It. (CATO Institute)
Debunking Lies About Voting and Citizenship (Brennan Center for Justice)
How widespread is election fraud in the United States? Not very (Brookings)
Analysis: Heritage Foundation’s Database Undermines Claims of Recent Voter Fraud (Brennan)
Besides the usual attempt to support the “Big Lie,” Trump’s motives are to depress turnout, create chaos in the voting mechanics, and maximize commitments from the less-than-heroic but ambitious GOP Congressional ranks. Team Trump is essentially setting the table in advance to challenge the vote. As of now, Trump holding the House is looking very doubtful even with all the gerrymandering repetitive stress syndrome.
That handicapping foreshadows what for Trump would be a loss of control of legislation and the risks of Democrats deciding what hearings take place on “sensitive topics” — notably Epstein, corruption, conflicts of interest, the 747 and emoluments violations, etc.
The scale of mail-in votes remains underappreciated…
The mail-in voting attacks raise obstacles for millions of voters — almost 50 million in 2024 — as we detail below in an excerpt from an earlier commentary:
“The White House will try to understate the significance of his proposed mail-in actions, but it is an enormously threatening move. As a frame of reference, voting tallies in the 2024 election (won by Trump) indicates 1 in 3 voted by mail for an estimated 48 million. That includes 40% of that group comprised of voters 65+ years in age. The balance across “geographic settings” showed 1 in 3 urban, 1 in 3 suburban, and 1 in 4 rural voters. Of the 48 million, white voters were around 27 million. The stats include 1 in 4 Democrats and 1 in 4 GOP with 5 states showing 1 in 3 GOP. That is a lot of votes.”
It is a “percentage game” that targets congested urban areas vs. ex-urban and rural. If you can suppress the same percentage of the vote to stay home, then the absolute vote counts are much more impacted in the metro areas. Trump can’t risk losing control of the purse strings and “who runs the hearings” in the House.
Trump also might be thinking about 2028, when he could very well seek a third term, Constitution be damned once again. Some of his recent appointees to the court refused in Congressional hearings to answer the simple question, “Can Trump run for a third term?” Not a lot of profiles in courage these days.
Could that bring an Obama ticket to take him on if “3 is the new 2”? It gets weirder by the year.
The executive order on voting: constitutional amendment by fiat?
The voting process as designed in the executive order to weaponize the US Postal Service is doomed to fail, as we covered in the SNAFU piece, where we cut and pasted some of the technology and labor demands in the Trump order that the USPS will need to execute.
Legal risks, threats, and manpower detours are faced by an entity, the US Postal Service, that loses billions. There is no way the demands of the executive order can be handled by the Post Office. All one needs to do is look at the hurdles being set up.
I have nothing against the Post Office — my father worked at the Post Office in South Station Boston for years — but the massive losses and inability to deal with the challenges of the Executive Order would require a massive, multi-billion-dollar series of investments and hiring. Make that multi-multi billion. That also would entail going to Congress for hearings on the viability of the undertaking and what it entails in dollars, investment, people, and years. That would improve transparency and shine a light on the fact it is designed to fail and certainly not to increase legal voter turnout. Then again, Trump “does not do the Congress thing” unless he has no other choice.
As an executive order, Trump has once again ducked checks and balances. That is why he got back to the SAVE Act ultimatums. The SAVE Act has the same problem of minimal attention being paid to the massive obstacles faced by the population of voters, especially for them to have all the right documents from authentic birth certificates to social security cards or new passports. Anyone ever tried to penetrate those bureaucracies? It is safe to say those without means and working two jobs are effectively being encouraged to “stay home.”
In the end, the USPS operational execution would melt down under the executive orders, and then the fraud flag would be getting flown by Trump, Markwayne Mullin in DHS, and perhaps Pulte in DNI, along with the full weight of Todd Blanche, Trump’s personal lawyer and AG, running the DOJ. This is where political risk starts to flow into macro risks. The courts would be very busy and political turmoil would spike. Meanwhile, asset allocators could start to frame the US as a very large emerging market.
The “enforcers” of the executive order look like a rogue’s gallery of loyalists…
The control of the process from the White House is a shocking departure from what the Constitution says. That gives the threat effects both legal teeth, DOJ and the AG, and potential violent enforcement, DHS with the masked, armed gangs of ICE and Team Steroids.
From the Executive Order:
“The Secretary of Homeland Security, the Commissioner of SSA, and the Postmaster General shall coordinate with the Secretary of Commerce in effectuating all relevant aspects of the implementation of this order.”
“The Attorney General shall enforce compliance with the applicable Federal statutes referenced herein and provide guidance to election officials, including any instrumentalities thereof; contractors; individuals involved in the administration of Federal elections; or public or private entities engaged in the printing, production, shipment, or distribution of ballots.”
That motley crew of enforcers includes the head of the USPS, who was out this past week promising full compliance with the executive order. Anyone remember the head of the USPS in Trump 1.0 who ripped out numerous high-speed sorting machines? He was a wealthy corporate executive and a big Trump supporter.
The AG is a former Trump personal lawyer who blocks a lot of the Epstein disclosure and was involved, somehow, in the transfer of Maxwell to a cushier prison. The voter rolls and elections controlled by the states roll up under this crew? Meanwhile, the head of DHS challenged the head of the Teamsters to a fight during the Senate hearing. Seriously. Perfect to oversee ICE.
Getting past the document hurdles: gestating an elephant…
The basic tech, overall resource needs, time to implement, and smoothing the path for execution in the post office is challenging enough. The sales pitch of “all we want is ID” by Trump fans is a misdirection play to avoid discussing their intent and the logistical challenges. Driver’s license is an ID, but the vote suppressors need more barriers to guard against a risk that is statistically zero, with very little rounding.
Birth certificates and social security cards are hard enough to get turned around, especially when you have moved far away from your old City Hall. Passports are a challenge and cost money many do not have. The hurdles are clear in terms of documents from the same government that is actively designing a process they want to see fail.
Official driver’s license as a test case…
As a side story, I finally got my own “official” NY driver’s license recently. It took months to get the information together, and when you are 68, chances are if you can find your social security card it may have disintegrated in your wallet.
Name changes have been raised as an example, and I got a small taste of that. Women will have nightmares in that name change category. For the new official NY State Driver’s license, I faced the challenge of my social security name being different than my historical name used in life. The first name and middle names are reversed from my birth name.
I thus had to jump through hoops at the DMV. Social security had no problem taking the max out of my paycheck for 45 years under my functioning name, but getting an updated social security card is a challenge. I finally got the license after a while with some supervisor third degree. I had been driving in NYC for 45 years, so it should not have been hard. But it was not easy. Imagine voting personnel with the legal threats from Trump hanging over them?
In my narrow case of the DMV, I think being an old white guy living on the Upper East Side helped. To be blunt, an old Black or Latin American guy in Pennsylvania or Georgia — no offense to either state, but NY is not a swing state — might have a different experience on voting registration documents.
The intent to deter and suppress is obvious to anyone who is not corrupt, deluded, a cult member, and/or a partisan hack. The government interests who demand this, Team Trump, do not want it to work. The goal is to suppress and disrupt and discourage. Record turnout in 2020, the highest since women had the right to vote, was how Trump got his butt kicked by 7 million votes. They know that. They naturally want low turnout.
Happy 4th of July
It seems like a really bad way to celebrate the 250th in a nation of immigrants, as Ronald Reagan believed before the later onslaught of racist xenophobes. His final speech used to be a governing principle in the US, even though history shows a lot of immigration laws passed, including the 1924 Act.
From Ronald Reagan’s last speech:
“Since this is the last speech that I will give as President, I think it’s fitting to leave one final thought, an observation about a country which I love. It was stated best in a letter I received not long ago. A man wrote me and said: You can go to live in France, but you cannot become a Frenchman. You can go to live in Germany or Turkey or Japan, but you cannot become a German, a Turk, or a Japanese. But anyone, from any corner of the Earth, can come to live in America and become an American.”
The weeks ahead will be challenging with Constitutional limits being abused regularly. We will see voting remain under siege from now through the election and beyond, and the separation of powers and co-equal branches of government get tested.
Not exactly Founding Father moments and the parades of youth…
With the 250th approaching on July 4, it is hard for a boomer to see this chaos while remembering the patriotic days of youth going to events for the American Legion and VFW, whether barbecues or parades. My father, who enlisted in the Marines to fight in Korea, would inevitably be in the local Legion Post color guard with some WWII and Korea vets. He voted for Goldwater and Nixon. Despite that, it is hard to say what he would think of Trump; my father loathed draft dodgers but was not too fond of liberals. Trump honoring himself on the day would certainly lead to some strong language.
We also await how the ICE intimidation factor will play out. Markwayne Mullin seems fine with the idea. My mother worked at the voter polls at East Junior High in Brockton, MA. I can’t help but wonder how she would react to seeing violent masked meatheads from ICE patrolling outside.
Brockton was an old industrial town that had its roots in immigration, with many coming to find work in the “shoe capital of the world” in late 1800s and early 1900s — note: largest supplier of boots to the Union Army. Today, that town still has a very large population of descendants from immigrant stock, including Irish, Italian — Rocky Marciano was the “Brockton Blockbuster” — Polish, and Lithuanian from the first waves. In recent years, it has been more about Cape Verdeans and Haitians. I still have family there while I live in the melting pot of NYC. I guess that makes this topic personal as well as about economics and patriotism.
Such towns have a lot of residents whose histories cut across the generations on the way to citizenship. My hometown also saw a significant influx of migrants from the South escaping Jim Crow and racism in the 1960s — classmates and teammates from my early years. They were often escaping Trump’s perverse view of what “Christian” means.
In the end, the fear of “illegals voting” is about power and control. The threat is concocted by the dishonest and unethical but most of all by the power hungry. The goal remains suppression by any other name.